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Apologists for the GOP argue that using the debt ceiling as “leverage” to reshape fiscal policy isn’t dangerous brinksmanship.They say that nobody is talking about “default” because even if the government couldn’t borrow anymore, there would still be plenty of revenue coming in for the government to make sure that our interest payments were made on time, assuring the full faith and credit of the United States were maintained.
But a new report from the Bipartisan Policy centre should make people think twice about being sanguine.
The basic gist is: If we hit the “X Date” (as they call it), when there were no more special measures that the Treasury could use to avoid hitting the debt ceiling, we would be in a situation of unprecedented legal and economic chaos.
Even if the Treasury could “prioritise” interest payments over other payments, you’d have a massive technical problem (you’d have about 100 million computerized payments that are scheduled to happen between February 15th and March 15th, you’d have a huge legal fight (various parties demanding that they get paid first) and you’d do huge economic damage, due to huge austerity and extreme financial market austerity.
You can see the full presentation here, but we wanted to isolate the part specifically about hitting the “X Date”.
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